Contruction Loans and What to Expect
January 15, 2010After spending what was most likely months searching for the house you have always wanted and having the real estate agent beg you countless times to come look at one more that would be absolutely perfect for you, you have finally come to the decision that building your own is the only option. This is a good place to be. You know what you want, now you just need to know how to get from this starting place to the end result. First things first, you are going to need a construction loan. If you would have bought a house through your agent, you would now be acquiring a mortgage which is a lot different.
A construction loan is a loan that is going to allow you, through the bank of your choice, to pay contractors to build your new home. Make sure the loan officer knows if you already own some land where you would like to build because the land becomes equity for you and you may not have need of a down payment. Without land, the cost of a down payment will have to be negotiated. You may want to save up and purchase a plot of land first. Be sure that you and your loan officer have open communication as you will have an ongoing relationship with him or her.
It is wise to remember that the bank you choose will be like your partner throughout the building process. This is because a construction loan is not an unsecured loan. The bank will work with you to make sure that the contractor does what he is supposed to do. This includes all necessary permits. The bank will not let the construction begin until everything looks good to them. As the house is being built, the bank will be giving you checks depending on what the terms of your loan are. You are completely responsible for how you handle the money given to you and always remember, you are going to pay it back. Be sure that you are using it to meet the needs associated with the building of your dream home.
Please make the articles describing equity requirements, down payments etc